May 29 (Bloomberg) -- Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the labor market continues to strengthen.
Jobless claims fell by 27,000 to 300,000 in the week ended May 24, a Labor Department report showed today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 318,000. The four-week average declined to the lowest level since August 2007, before the last recession began.
Fewer dismissals may be a sign that companies, already lean from recession-era job cutting, are gearing up for improving demand as the economy shows signs of rebounding from a first-quarter slump. Gains in the labor market are needed to underpin consumer spending, which accounts for 70 percent of the economy.
“Jobless claims are at a very low and attractive level, and that’s stimulating employment growth,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, who is among the top forecasters for claims.
A separate report today from the Commerce Department showed that the U.S. economy contracted for the first time in three years from January through March as companies added to inventories at a slower pace and curtailed investment.
Gross domestic product fell at a 1 percent annualized rate in the first quarter, a bigger decline than projected, after a previously reported 0.1 percent gain.
Stock futures were little changed after the reports. The contract on the Standard & Poor’s 500 Index expiring next month rose less than 0.1 percent to 1,910.70 at 8:41 a.m. in New York.
Economists’ estimates for jobless claims in the Bloomberg survey ranged from 300,000 to 330,000 after an initial reading of 326,000 in the prior week. The decrease from a week earlier was the biggest since the period ended April 5.
The four-week average of claims, a less-volatile measure than the weekly figure, decreased to 311,500 from 322,750 the week before.
The number of people continuing to receive jobless benefits fell by 17,000 to 2.63 million in the week ended May 17.
The unemployment rate among people eligible for benefits held at 2 percent in the week ended May 17, today’s report showed.
Initial jobless claims reflect weekly firings and typically decrease before job growth can accelerate. Some companies, such as Hewlett-Packard Co., are still reducing headcount to lower costs.
Hewlett-Packard, the world’s second-biggest personal-computer maker, is cutting as many as 16,000 more employees on top of 34,000 already announced as it faces its third straight drop in annual revenue.
Payrolls expanded by 288,000 in April after a 203,000 gain in March, while the unemployment rate dropped to 6.3 percent. The steady progress means Federal Reserve policy makers will probably continue reducing stimulus while keeping interest rates low.
At their last meeting in April, Fed policy makers noted conditions in the labor market continued to mend and “participants generally expected further gradual improvement,” according to a May 21 statement.
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